The chairman of the Commodity Futures Trading Commission said Wednesday that clearinghouses set up to handle over-the-counter derivatives will determine which products can be cleared.

Gary Gensler, chairman of the U.S. futures regulator, said that financial authorities' responsibility lies in ensuring clearing entities meet "international standards" in risk management and liquidity.

The Obama administration has called for all "standardized" over-the-counter derivatives to be cleared by a central counterparty as a means of reducing systemic risk in off-exchange markets.

Speaking to the press on the sidelines of the Managed Funds Association Forum in Chicago, Gensler said that the definition of "standardized" is up to clearinghouses, most of which are backed by exchanges.

"If a clearinghouse accepts it, it should be considered standardized," Gensler said.

Clearinghouses for over-the-counter derivatives will be subject to risk management and governance standards, Gensler said, which will ensure broad participant access and that the entities "are not just controlled by the dealers."

Gensler said that the CFTC and other regulators will work with international counterparts to ensure a global set of standards for over-the-counter clearing services.

Exchanges, including IntercontinentalExchange Inc. (ICE), CME Group Inc. (CME), NYSE Euronext (NYX), Nasdaq OMX Group (NDAQ) and Deutsche Boerse AG (DB1.XE) have moved quickly to set up central counterparties for over-the-counter instruments in the wake of the financial crisis.

Government efforts to reduce risk in products like credit default swaps have provided fuel for exchanges' push to clear more OTC products, while dealers and hedge funds have laid out targets for routing more of the business through central counterparties.

-By Jacob Bunge, Dow Jones Newswires; 312-750-4117; jacob.bungge@dowjones.com